Doede Corporation uses activity-based costing to compute product margins. In the

Question

Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below:

Overhead costs:

Distribution of Resource Consumption Across Activity Cost Pools:

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Activity:

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

Sales and Direct Cost Data:

What is the overhead cost assigned to Product W1 under activity-based costing? (Round your intermediate calculations to 2 decimal places and your final answer to nearest whole dollar amount.)

Equipment depreciation $ 110,000 Supervisory expense $ 6,900

Explanation / Answer

Solution:-

Assignment of cost to Machining, Order Filling and other:-

Overhead cost assign to Product W1:-

Machine Order filling Other Equipment Dep 44000 33000 33000 Supervisor 2760 1380 2760 Total 46760 34380 35760

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